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Daniel J. Graeber

Daniel J. Graeber

Daniel Graeber is a writer and political analyst based in Michigan. His work on matters related to the geopolitical aspects of the global energy sector,…

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Weak Hurricane Season Forecast Good News For Drivers

With a modest hurricane season forecast for 2014, U.S. drivers are unlikely to face weather-related gas price increases, but foreign crises or domestic refinery problems could still impact prices.

That’s according to the American Automobile Association (AAA), which reported a national current average price for a gallon of regular unleaded gasoline at $3.65, about 2 cents lower than last week.

Less demand for gasoline during an unusually harsh winter has kept prices relatively low so far this year. That, and the glut of oil in North America, provided some level of protection for American drivers this spring.

The late spring period, when refineries shift from a winter to a summer blend of gasoline, usually causes some fluctuation for gasoline prices. AAA spokesperson Michael Green told Oilprice.com that after a short lull, gas prices should peak in July because of strong summer demand.

"If everything runs smoothly, the national average could drop 10-20 cents per gallon through late June or early July on rising [oil] supplies," Green said.

U.S. hurricanes usually hit in late summer, just as peak driving season is ending. In the past, major storms have caused huge swings in retail gasoline prices; when Hurricane Katrina struck in 2005, the national average price rose 46 cents in one week because of the closure or damage to Gulf Coast refineries.

But with the 2014 Atlantic hurricane season expected to be weak, the likeliest factors to influence gas prices will be overseas crises or refinery issues, Green said.

Green pointed to the democratic uprisings throughout the Arab world in 2011 -- the so-called Arab Spring period – that sent the national average price to nearly $4 per gallon. Though hard to predict, he said, political crises in oil-rich nations like Libya or Russia can cause a ripple effect in the global oil market that eventually impacts American drivers.

At the refinery level, Green said that section of the oil sector deals with volatile chemicals and high temperatures that can cause serious operational issues without warning if things go wrong. A simple power outage, like the October 2012 failure at Exxon Mobil's refinery in Torrance, Calif., can wreak havoc on gasoline prices at the regional level.

By Daniel J. Graeber of Oilprice.com




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